WASHINGTON — With fuel prices nearing record levels, President Biden urged Congress on Wednesday to temporarily suspend Federal gas tax and giving Americans “a little breathing room,” even as the proposal met bleak expectations on Capitol Hill.
In a speech from the White House, Mr. Biden asked Congress to raise federal taxes — about 18 cents per gallon of gasoline and 24 cents per gallon of diesel — through the end of September, shortly before the fall midterm elections. The president has also asked states to suspend their gas taxes, hoping to ease the economic pain that has contributed to his shrinking popularity.
“I fully understand that the gas tax credit alone will not solve the problem,” Biden said. But it will provide families with some immediate relief. Just a little breathing room as we continue to work to bring prices down over the long term.”
Critics have questioned the effectiveness of the gas tax credits, dismissing the idea as little more than an attempt by the White House and weak Democrats to show that the party cares about Americans’ financial pain.
White House officials, who have acknowledged opposition from leading Democrats and Republicans in Congress, said Biden plans to reach out to both parties to build support — another test of the president’s influence at a time when his approval ratings are low and the party faces losses in the midterm elections.
Biden’s decision to press ahead with his appeal to Congress, despite the lack of consensus even among Democrats, was the latest sign of desperation in the White House for finding even modest steps to address an issue that undermines the president’s support. .
Shortly after Mr. Biden spoke on Wednesday, Representative Steny H. Hoyer, the Maryland Democrat and majority leader, questioned whether Democrats had enough votes to move forward with the motion.
“Do I think we have votes? We haven’t counted,” he said. “So we don’t know yet.”
Senator Mitch McConnell of Kentucky, the Republican leader, quickly rejected the president’s call to suspend the tax, but all but the plan in the equally divided Senate.
“This administration’s big new idea is a ridiculous proposal that senior members of his party already brought down early on,” said Mr. McConnell.
Economists have criticized the idea of suspending the federal gas tax as a wasteful move for the government, given the revenue that would be sacrificed in an effort to provide only a light dose of relief to consumers. Its impact on them would be so limited: The tax is now a tiny slice of the price at the pump, coming in at less than 5 percent of the total cost, that Americans might not even notice its absence.
For example, even if all the benefits were passed on to consumers, a Ford F-150 owner of 20 miles per gallon driving 1,000 miles per month would save about $9 if the federal gas tax were suspended.
While the administration and some Democrats in Congress have had it for months Discuss such a commentRepublicans widely oppose it and accuse the administration of undermining the energy industry. Even members of Mr. Biden’s party, including House Speaker Nancy Pelosi, have in the past expressed concern that companies would absorb too much of the savings, leaving little for consumers.
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Mr. Biden said he wants to ensure consumers benefit from the federal tax freeze. The administration estimates that the combination of several potential steps — a suspension of the tax, a moratorium on state taxes on gas and an increase in refining capacity by oil companies — would lower gas prices by at least $1 a gallon.
“I don’t think that drives the will about people wanting to buy more, and it also doesn’t save them a lot of money either,” said Garrett Golding, business economist at the Federal Reserve Bank of Dallas. “It looks like something is being done to bring gas prices down, but there’s not much there.”
This year, oil and refined fuel prices have soared to their highest levels in 14 years due to the Russian invasion of Ukraine, sanctions against President Vladimir Putin, and a rebound in energy use as the United States recovers from the coronavirus pandemic. The White House has increasingly tried to shift the blame for rising prices toward Russia, a The Strategy That Didn’t Do Much To Calm Anxiety among Americans. The national average for regular gasoline was $4.95 a gallon on Wednesday, according to AAA, after hitting $5 this month.
Biden also issued strategic oil reserves and suspended a ban on summer sales of high-ethanol blend gasoline in a bid to mitigate price hikes, frustrating climate activists who remain unhappy with the collapse of the president’s climate package and social spending.
Congress hasn’t increased the federal gas tax since 1993. But it hasn’t raised the tax either. Taxes on gasoline and diesel now provide the majority of federal funding used to build and maintain highways. $36.5 billion in 2019 – Although expenditures have exceeded allocated revenues in recent years.
That is, Mr. Biden’s latest move to address a political vulnerability could undermine funding for a key legislative achievement during his time in office: infrastructure investments.
Rep. Peter A. said: DeFazio, an Oregon Democrat and chair of the Transportation and Infrastructure Committee, said the proposal would have a “growing effect” for delaying the administration’s goals to reform highways and transit systems across the United States.
“I will not support her,” he said.
Mr. Biden sought to allay some of those concerns on Wednesday. He said that a $1.6 trillion drop in the national deficit last year would provide the administration with breathing space to suspend the tax. Jennifer M. Granholm, the energy secretary, told reporters that the White House would discuss with Congress more money to recoup losses from the tax. The tax suspension would cost about $10 billion.
“We’ll still be able to fix our highways and lower gas prices,” Biden said. “We can do both at the same time.”
Ms Granholm will also speak to oil company executives this week about lowering the price of gas. It did not specify exactly how the administration would ensure that the savings from the suspension trickled down to consumers, rather than result in a profit for gas companies.
“We will be having this as an honest and serious conversation tomorrow asking how we can be partners in providing relief to people,” Ms Granholm said, adding that the president intends to speak to members of Congress about the proposal in the coming days.
Progressives and energy experts have called for alternative methods smooth out gas price shocks or Suction Some inflated profits grabbed by oil companies and refineries while supply was restricted. In her 2008 presidential campaign, as inflation-adjusted prices approached a higher point, Hillary Clinton suggested Pair a gas tax holiday with a tax on oil company profits.
But among the limited tools the federal government has at its disposal to lower gas prices, raising taxes could resonate most with Americans.
“It’s something that voters care about,” said Eric Mulliger, associate professor of economics at the University of California, Davis.
Dr. Mulliger search found That drivers adjust their consumption more in response to changes in gas prices than they do to changes in the market of similar size, in part due to the news media interest generated by these changes.
Senator Maggie Hassan, a Democrat from New Hampshire, who is facing a difficult re-election bid, said Mr. Biden will need to do more to provide comfort to voters. She said in a statement that the White House should move forward with suspending the gas tax for the rest of the year, rather than just three months.
“I will continue to pressure my colleagues in Congress to suspend the gas tax, and I will continue to urge the president to take executive action to reduce energy costs for households immediately,” she said.
States have more power to lower gas prices, as their taxes and fees are rising steadily, to about 38 cents a gallon on average. Three states have so far passed and completed gas tax exemptions: Maryland, Georgia, and Connecticut. New York Taxes suspended At the beginning of this month, Florida will raise taxes for the month of October.
However, gasoline producers and retailers are likely to reap some benefits. that Economist Analysis The University of Pennsylvania’s Ben Wharton budget model showed that in states where gas tax credits had expired, 58 percent to 87 percent of the value of the pending gas tax was passed to consumers, with suppliers absorbing the rest. The Fed’s comment will be so much smaller that it may be overshadowed by the volatile base price of oil, which has fallen over the past week.
Biden also targeted oil companies on Wednesday, demanding an expansion of refining capacity to cut costs at the pump, just days later. CEOs accused of profiteering And “exacerbate the pain” of consumers. Even as refineries struggle to keep up with rising demand, refineries have added less than 1 percent to their worldwide capacity.
“My message is simple to the companies that run those gas stations and set those prices at the pump: This is a time of war and global danger,” Biden said. “These are not normal times. Lower the price you charge at the pump.”
Emily CochranAnd the Katie Edmondson And the Stephanie Lay Contribute to the preparation of reports.